04/09/2026
Daily Market Wrap - 4/9/2026
Thursday...
Stocks have ended the day higher. The Dow closed +275.88 at 48,185.80 and the S&P 500 closed +41.85 at 6,824.66. Mortgage Bonds are higher on the day.
The 30-Year Bond Auction was met with average demand. MBS Highway's Bill Hagmann grades the auction a C. The bid to cover of 2.39 was just under the one year average of 2.40. Direct and indirect bidders took 88.3% of the auction compared to 88% in the previous 12.
Personal Consumption Expenditures
The Fed’s favorite measure of inflation, Personal Consumption Expenditures, was released this morning. The report is for February, as it’s still lagging from the government shutdown, and does not include the rise in oil prices that started in March.
Headline PCE rose 0.4% in February and 2.8% year over year, which was unchanged from the previous report. Both figures were as anticipated by the market.
Core PCE, which strips out food and energy prices and is the main focus of the Fed, also rose 0.4%. Year over, Core inflation decelerated slightly from 3.1% to 3%, as expected.
The inflation was pretty broad based, although shelter was pretty well behaved at 0.2%. The report was a bit disappointing in our eyes, as we were hoping for more improvement, especially since the replacement from last year was the highest we will see in quite some time. And of course, the inflation figures will rise in the next release for March due to the war with Iran.
Also within this report was a read in Incomes and Spending. Income fell 0.1%, which was 0.3% beneath estimates. Spending rose 0.5%, as expected. As a result, the savings rate fell to 4%, near the lowest reading since 2022.
Putting this all together: The labor market has been showing signs of weakness, especially when looking at the readings outside of the BLS, which is highly unreliable. Falling incomes are a sign of a weak labor market, and this was ahead of higher oil prices. Because consumers have to spend money on oil, many will be left with much less discretionary income, and it can cause the economy to slow, as well as businesses.
When a business starts to slow, their biggest expense is labor…and often they will have to hire less, cut hours, or start laying off workers. We saw this within the March BLS report where hours worked fell.
For this reason, the Fed may have to still start looking to cut rates later this year if oil prices remain elevated. Many have already mentioned that while oil prices initially cause inflation and rates to rise, over time they can have a slowdown or potentially recessionary impact, as well as hurt the labor market. Interestingly, higher oil prices can cause the Fed to have to cut to keep the economy going if this persists.
GDP (Q4 Final Reading)
The Final Q4 GDP reading was released, showing 0.5% annualized growth in the quarter, which was once again revised lower.
While this was weaker than expected, the government shutdown played a big role. Federal government spending dragged down GDP by 1%.
Still, the economy appeared to be slowing from the faster pace earlier in the year, ahead of the current economic situation with oil.
Jobless Claims
Initial Jobless Claims, which measures individuals filing for unemployment benefits for the first time, rose 16,000 to 219,000.
While this did rise, it’s still at a relatively low level. Once again, this figure does not capture those entering the gig economy.
Continuing Claims, or those who continue to receive benefits after their initial claim, fell 38,000 to 1.8M. This figure has been a bit lower than what we have been seeing, but there are benefits expiring at the same time.
CPI Preview
Tomorrow’s CPI reading for March will be important for the markets. It’s not expected to be pretty due to the rise in oil prices.
Headline inflation is expected to rise by 0.9% during the month and go from 2.4% to 3.3% year over year.
The Core rate, which strips out food and energy prices, is expected to rise from 2.5% to 2.7% year over year.
While a jump is expected, and the markets may be pricing it in already, it’s something to watch that could spook Bonds.
Truflation has a very different view on the Consumer Price Index, showing 1.66% year over year inflation in their latest reading.
Technical Analysis
Mortgage Bonds have managed to close back above their 200-day Moving Average, which is a positive sign. Bonds have more room to improve before reaching a dual ceiling comprised of the 100 and 50-day Moving Averages.
The 10-year is currently battling support at its 25-day Moving Average. if yields can break beneath this level there is room for improvement before reaching support at around 4.2%.
Closing position: Carefully Floating
